BlackRock(BLK) - 2023 Q4 - Annual Report

Financial Performance - Total revenue for 2023 was $17,859 million, a slight decrease of 0.1% from $17,873 million in 2022[7] - Operating income for 2023 was $6,275 million, with an operating margin of 35.1%, down from 35.7% in 2022[7] - Net income attributable to BlackRock, Inc. increased to $5,502 million in 2023, compared to $5,178 million in 2022, representing a growth of 6.3%[7] - Diluted earnings per common share for 2023 was $36.51, an increase from $33.97 in 2022[7] - Nonoperating income for 2023 was $706 million, significantly higher than $89 million in 2022[7] - Adjusted operating income for 2023 was $6,593 million, with an adjusted operating margin of 41.7%[7] Assets Under Management (AUM) - Total Assets Under Management (AUM) reached $10.0 trillion as of December 31, 2023, reflecting a compound annual growth rate (CAGR) of 11% over the last five years[10] - The AUM mix includes $5,293,344 million in equity, $2,804,026 million in fixed income, and $870,804 million in multi-asset investments[8] - Total AUM increased to $10,008,995 million as of December 31, 2023, reflecting a net inflow of $288,695 million[22] - As of December 31, 2023, total long-term AUM increased to $929.7 billion, reflecting a market change of $85.4 billion despite net outflows of $8.5 billion[14] Client Segmentation and Flows - Retail clients accounted for 10% of long-term AUM, with active mutual funds comprising approximately 75% of retail long-term AUM[12] - US retail long-term net outflows amounted to $5 billion, primarily from alternatives, fixed income, and multi-asset strategies[14] - International retail long-term net outflows were $4 billion, mainly due to redemptions from alternatives and equity strategies[14] - Institutional active AUM totaled $1.9 trillion, reflecting $87 billion of net inflows, driven by significant outsourcing mandates[18] Investment Strategies and Performance - BlackRock's ETF AUM reached $3.5 trillion, with net inflows of $186 billion in 2023, primarily driven by index-tracking iShares-branded ETFs[15] - Fixed income AUM ended 2023 at $2.8 trillion, with net inflows of $143 billion, including $112 billion from ETFs[18] - Alternatives net inflows were $10 billion, led by infrastructure, private credit, and private equity, excluding $7 billion of capital return[18] - Multi-asset strategies generated net inflows of $82,787 million, with institutional clients contributing $84 billion of net inflows[23] Technology and Innovation - BlackRock's technology solutions and digital distribution tools are enhancing the engagement of financial advisors and retail investors with its products[12] - Technology services revenue reached $1.5 billion, up 9% year-over-year, with annual contract value (ACV) increasing by 10%[30] - Over half of new client mandates for Aladdin spanned multiple products, indicating strong net sales in 2023[30] - BlackRock's technology platform, Aladdin, continues to evolve, focusing on enhancing multi-asset risk solutions and providing clients with tailored connectivity options[30] Regulatory Environment - BlackRock's business is subject to various global laws and regulations, which could materially impact its profitability and operational activities[41] - The SEC proposed amendments to rules governing open-ended fund liquidity risk management, which could affect BlackRock's product offerings[43] - The UK plans to increase required liquidity levels for money market funds (MMFs), potentially impacting BlackRock's MMF products[44] - The SEC proposed rules requiring substantial climate-related disclosures from corporate issuers, which may affect BlackRock's investment strategies[45] Diversity, Equity, and Inclusion (DEI) - As of January 1, 2024, approximately 44% of BlackRock's global workforce identified as women, with 33% of global senior leaders being women[36] - BlackRock's DEI strategy focuses on talent and culture, client support, and impact in underserved communities[36] - The company offers a wide range of benefits, including comprehensive healthcare and mental health support, to enhance employee well-being[39] Employee Engagement and Culture - BlackRock's employee engagement mechanisms include opinion pulse surveys and local community involvement initiatives[38] - The company has implemented a strong pay-for-performance culture, aligning employee incentives with firmwide results and individual performance[39] - BlackRock's leadership development programs are designed to foster career growth and build foundational skills among people managers[40] Global Operations and Compliance - BlackRock's international operations are subject to complex regulatory reporting requirements across multiple jurisdictions, necessitating monitoring of issuer exposure levels[72] - BlackRock's operations in China face regulatory risks, including complex data security regulations that may increase compliance costs and limit investment opportunities[68] - BlackRock's subsidiaries are subject to various regulations including the Investment Advisers Act of 1940 and the Investment Company Act of 1940, which impose stringent compliance and operational obligations[70]